Petco Q1 2026: A Measured Step Toward the Reach for the Sky Ambition

Ticker: WOOF • Earnings context in this article includes EPS, EPS consensus, earnings surprise, and revenue forecast considerations as the company reports first-quarter results for 2026.

Executive snapshot

Petco Wellness & Petcare no longer pretends it’s merely a pet-supply shop. In the first quarter of 2026, the retailer posted net sales of about $1.5 billion, up a hair from a year earlier as comparable sales crept higher by roughly 0.7%. The top line beat the zéro-to-hero expectations dance many investors expect to see when a plan like Reach for the Sky is supposed to bear fruit, even if the increase is modest.

On the gross line, gross profit came in around $574.4 million with a gross margin of 38.4%, a modest 21 basis point improvement. The operating income emerged at $24.6 million, delivering an operating margin of about 1.6%. Yet, the company still shows a net loss of $15.1 million for the quarter, compared with a prior-year net loss of $11.7 million. The company does report adjusted EBITDA of $97.3 million, up from $89.4 million, underscoring a profitability inflection that some observers might call a sign of leverage starting to work if top-line momentum holds.

Store activity notes: Petco ended the quarter with 1,378 stores after closing 4 net locations. The tone from leadership emphasizes the ongoing work to scale its omnichannel ecosystem and to strengthen core growth engines, especially in consumables and services.

The core engines and what changed

The release highlights that consumables are showing improved momentum and that the services business continues to outperform, acting as a key growth engine. Management also pointed to the momentum of the Phase 3 "Reach for the Sky" strategy as a driver of future profitability, signaling a shift from a pure store-count story toward a more integrated omnichannel approach.

CFO Sabrina Simmons framed the quarter as a solid start that supports reaffirming the full-year outlook, suggesting that the internal path to profitability hinges on continued operational improvements and a better mix of high-margin services alongside traditional product sales.

The capital discipline shows up in EBITDA, not yet in a clean EPS print. In terms of earnings semantics for investors who track EPS, earnings surprises, and EPS consensus, the company did not publish an EPS number in this release. That means the “EPS consensus” versus actual EPS remains something for the next reporting cycle to confirm, and any potential earnings surprise will depend on how the bottom-line effects of higher gross margins and SG&A leverage translate into per-share results.

Outlook and guidance

Petco reaffirmed its fiscal 2026 outlook and continues to guide for continued momentum in the near term, including a 2Q outlook that aligns with the trajectory it described in the first quarter. The mixed signal here—improving profitability on an EBITDA basis and a still-ongoing net loss—makes the next few quarters especially important for investors evaluating the company’s path to sustained earnings growth.

Implications for Petco and sector peers

The quarterly sequence—flat-to-low revenue growth, modest gross-margin expansion, and EBITDA improvement—reads like a company executing a transition rather than just reporting a burst in sales. If the omnichannel push and the services-dominant mix can drive mid-teens to low-double-digit improvements in profitability by the back-half of 2026, investors might begin to expect a move toward positive EPS once non-cash charges and interest tilt favorably.

For peers in the pet-related consumer space and broader omnichannel retailers, the Q1 results reinforce a template: lean into services, optimize margins, and manage store closures as a lever of efficiency rather than a sign of decline. The emphasis on a strong, wholly owned omnichannel ecosystem could tilt strategic bets toward integrated customer experiences, even if that comes with near-term earnings volatility.

Takeaways

Revenue scale remains solid, with net sales near $1.5B and a slight comp-sales uptick.
Gross margin shows resilience, while operating income and EBITDA reflect ongoing leverage; the bottom line remains a net loss for now.
Store count is stable to slightly reduced; the real growth lever appears to be in services and omnichannel execution.
The company’s guidance is intact, and leadership signals confidence in the longer-term Reach for the Sky plan.
For investors tracking EPS, EPS consensus, and earnings surprise dynamics, the next reports should illuminate how the EBITDA progress translates into per-share profitability.

Quoted sentiment

“Our strong first-quarter results—highlighted by positive comparable sales and profitability that exceeded our outlook—provide clear, early validation that our Phase 3 Reach for the Sky strategy is working,” said Joel Anderson, Chief Executive Officer of Petco.

And from the finance helm: “We are pleased to reaffirm our full-year outlook,” added Sabrina Simmons, Chief Financial Officer, underscoring that the momentum supports a longer-run plan to strengthen retail and financial fundamentals.